Examination of Witnesses (Questions 20
- 39)
WEDNESDAY 23 MAY 2007
MR MICHAEL
GRADE
Q20 Chairman:
Not announced.
Mr Grade: Yes. The licence fee had not been
decided. The Charter was agreed. It had been sealed and signed
by the Privy Council and so on, so the future was secure, it was
just the level of the licence fee.
Q21 Chairman:
You say just the level of the licence fee, that was quite an important
issue, was it not?
Mr Grade: A very important issue for the Government,
for the licence-fee payers and for the BBC, yes. It had dragged
on and on and on. We had expected it to be concluded in the summer,
but for reasons I am not privy to it just dragged on and on.
Q22 Chairman:
You feel that was a responsibility of government.
Mr Grade: I do not think at the point that I
left there was anything more that the BBC could say or do to influence
the Government in terms of the settlement, and, having in my own
mind made the decision that I wanted to accept this offer from
ITV, I felt it very important to say so immediately, so that I
could not be accused of "riding two horses", if you
like.
Q23 Chairman:
When you came to see us, you seemed very committed to the BBC
and public service.
Mr Grade: I still am, Chairman.
Q24 Chairman:
Did you not feel some conflict of loyalties?
Mr Grade: Conflict of loyalty? No. I remain
loyal to the BBC. I would always defend the BBC. I would defend
the Charter; I would defend the licence fee; I would defend the
governance structure and what the BBC stands for, the interests
of the licence-fee payers and so on. That does not change. But
I think we are all entitled to make our own career choices.
Q25 Lord Corbett of Castle Vale:
There is an enormous difference in the salaries involved in both
jobs, your present job and the job you had at the BBC. I have
some ball park figures here: about £110,000-odd for the BBC
job and £825,000 plus bonuses and share options at ITV. Do
you think the BBC has the financial strength to attract and retain
the talent that it needs at the top of the organisation or are
there some big differences in your present role as Executive Chairman
of ITV and that of Chairman of the BBC?
Mr Grade: The two jobs are not comparable. First
of all, the Chairman of the BBC and the BBC Trust is a part-time
role. My job at ITV is a full-time role in the private sector.
The Government made adjustments to the level of pay for the Trustees
and the Chairman of the Trustees from the rates that had been
paid traditionally to Governors and the Chairman of the Governors,
and there was a rise. I think my salary as Chairman of the Governors
was roughly £70,000, I cannot remember precisely, but the
basic rate for the Chairman of the Trust is £140,000, as
I recall. I do not think anybody applying to be Chairman of the
BBC does it for the money. You do it because you believe in it
and you want to do it, but I do not see why people should do it
for nothing. You do not want to attract only the people who can
afford to do it; you want to make sure that you have as wide a
pool as possible from which to choose.
Q26 Lord Corbett of Castle Vale:
You have given the impression that your present job is much more
hands-on in terms of the management aspects of it than the Chairman
of the Governors.
Mr Grade: Very much so, yes.
Q27 Lord Corbett of Castle Vale:
We are still wrestling with the Director-General role.
Mr Grade: Yes. We can come on to that, if you
like. In my present role, I am Chairman and Chief Executive of
ITV, which means that I am involved in editorial decisions, which
programmes will get made, the schedule and so on. It is delegated
to some very good people but, ultimately, I am responsible and
consulted and have an input into that. As Chairman of the BBC,
whether Chairman of the Governors or Chairman of the Trust, that
is not something in which I would get involved. It is delegated
entirely, and that is a line you should not cross as Chairman.
At heart, I am a broadcaster. That is my discipline.
Q28 Lord Corbett of Castle Vale:
If the BBC had paid you more, would you have stayed?
Mr Grade: No. Just as I have a deep-rooted conviction
that the BBC is one of the great institutions of the UK, I also
have a huge emotional stake in the success of ITV. My family were
amongst the families of independent television back in 1955. I
learned my trade in ITV during 1973 and 1981 and it was quite
painful watching ITV's slow descent. I felt very frustrated. I
felt I would love to have a chance to fix it. Just as it broke
my heart seeing the BBC in the mess after Hutton and I just felt
I had something to contribute to try to help put it together again,
it is the same feeling.
Q29 Lord Maxton:
As you rightly said, you are a broadcaster. It would appear that
the new Chairman of the BBC Trust and the Trust itself is now
more of a regulator than a broadcaster. Did that influence your
decision to leave the BBC?
Mr Grade: Not at all. Not at all.
Q30 Lord Maxton:
Do you think that is what is happening, though? Is it a regulator
rather than a broadcaster?
Mr Grade: There is some regulatory responsibility
certainly but there is no question that the Chairman of the BBC
Trust, whoever he or she may be, is the Chairman of the BBC and
represents now, very clearly and constitutionally, the interests
of the licence-fee payers rather than simply the interests of
the institution. It is a very clear role.
Q31 Lord Maxton:
Is it a clear role?
Mr Grade: A very clear role.
Q32 Lord Maxton:
Is there not a conflict between those two aspects, between being
a broadcaster and a regulator?
Mr Grade: Not at all. I think the structure
copes very well with that potential conflict by separating the
Trust from the day-to-day operation of the BBC. The Trust is able
and required to step back from the day-to-day operation of the
BBC, to take a measured view, an evidence-based view, an independently
gathered evidence-based view, of what is in the best interests
of the licence-fee payers. In the past, the Governors have inevitably
acted in the best interests of the institution from time to time,
and the interests of the institution are not always the same as
the interests of the licence-fee payers. That is very clear.
Q33 Lord Maxton:
There already has been some comment that the Trust is acting as
a regulator to stifle some of the innovation, particularly on
the BBC online services.
Mr Grade: The Trust is there. The BBC has a
very difficult job. It represents £3 billion of public intervention
in a dynamic market-place where there is a very exciting and excitable
private sector. Whether the BBC likes it or not, every decision
the BBC makes about expansion, retraction, whatever, has some
impact on the private sector. Somebody has to make sure that the
BBC operates in the interests of licence-fee payers as a whole
and the interests of the licence-fee payers go beyond simply their
interest in the BBC. They have an interest, as consumers, in having
plurality of supply, choice, and so on, and the Trust has to take
account of that. Constitutionally, under the old model, it would
have been impossible to disentangle the Board of the BBC, the
governing body of the BBC, from the day-to-day interests of the
BBC, and to take that detached, objective evidence-based view
of what is in the public interest. It is very clear to me.
Q34 Bishop of Manchester:
You have already spoken this morning about defending the governance
structure of the BBC. When you came and gave evidence to the BBC
Charter Review Committee you did speak about the five principles
of governance which you saw as being important and recognised
that not all of them could be put into the governance proposals,
yet, if I remember correctly, you did go on to say that you felt
it was all workable. I think I take from that a sense that—as,
I suppose, in any organisation—there are going to be some
inbuilt weaknesses. I wonder if you could say something to us
about what you perceive to be the main weaknesses in the roles
and responsibilities in the new structures.
Mr Grade: With respect, if I may correct a slight
emphasis there. I set out to the Charter Review Committee the
five principles against which the Governors of the BBC would judge
any model. At that time there were a number of models that were
floating around. The model that emerged was one, in my view, that
did pass all five tests. Please do not ask me to name the five
tests.
Q35 Chairman:
We have a document here.
Mr Grade: I do not have the benefit of a BBC
brief! The weaknesses? The obvious weakness is that there was
still some scepticism around the place that it is going to work.
I believe it is a very clever, practical solution to the historic
problems of the governance of the BBC. I am absolutely confident
that, over a period of time, as the Trust is tested in various
issues, whatever they may be, whether they are market impact assessments,
public value tests, issues of public controversy in the BBC and
so on, there is nothing in the present constitution, the new constitution
of the BBC, that will get in the way of the Trust acting absolutely
in the public interest. I am really certain. I would not have
signed up to it. The other Governors would not have signed up
to a model they did not believe, with their intimate knowledge
of the weaknesses and strengths of the previous system, would
work. I was talking to the Director-General at an event the other
night and he said that, from his perspective, the day-to-day management
of the BBC had improved dramatically as a result of the high calibre
of recruits, non-executive recruits, to the Operating Board; that
they were tested far more effectively and the thing was working
really well. He was very, very upbeat about it and very confident
that it was working well.
Q36 Bishop of Manchester:
You give a robust defence there but you have also just said to
us that there is some scepticism around. Could you define in any
way what you have picked up about that? Where are the areas where
people are concerned?
Mr Grade: There were lots of other models that
were floating around: the BBC should come under Ofcom, there should
be Of-Beeb, there should be a unitary board, there should be this—everybody
has their own ideas. It is a complex issue. The constitution of
the BBC is a complex issue. We spent two years steeped in debate
about how we could make the new model work better than the old
model. The people who are critical of it, I suspect, are way behind
the debate. They have not really understood and analysed what
the problems are and why we signed up for the solutions that we
now live with. Everybody has their own model. The BBC is sui
generis. There is no off-the-shelf model for the BBC. There
are business issues, editorial issues, issues of public representation,
all kinds of issues. There is a whole matrix of dynamics in the
BBC where you have to distil that into a governance model that
will enable the BBC fundamentally to represent the licence-fee
payers and, secondly, to manage its relationship with the private
sector in a way that is much more measured and cautious than hitherto.
Q37 Chairman:
You would not run ITV in that way.
Mr Grade: We have a direct relationship with
our shareholders. It is a very, very different model. A very different
model. I think we have all rejected in the private sector two-tier
boards of the sort that we have seen modelled on the Continent
and some places. The UK model in the private sector works very
well. The BBC model will work very, very well, but the BBC is
one of a kind and it takes a one-of-a-kind solution.
Q38 Baroness McIntosh of Hudnall:
Going back to your point about the best interests of the licence-fee
payer, do you think there is any difference between the public
interest as represented by the licence-fee payers, and the interests
of the BBC itself?
Mr Grade: Yes.
Q39 Baroness McIntosh of Hudnall:
Because you made a very clear distinction.
Mr Grade: Yes.
| 
